MetaTrader 4 is one of the most powerful Forex trading platforms on the market today. This revolutionary set of tools opens up a whole host of features to new traders and veterans alike that no other platform on the planet provides.
There’s a reason why so many top-tier brokers feature MT4, and why so many investors simply won’t join forex brokers that do not build their platform on top of this bedrock suite of tools. If you are serious about making the most of your forex opportunities you need to go beyond the basic set of tools in MT4, though.
You need to learn how to set a trailing stop loss on MT4 and other advanced strategies if you’re going to succeed.
It is very simple to set a trailing stop loss on MetaTrader 4:
- Once a trade is already open within the markets, go to the Terminal tab.
- Right click on the trade.
- Hover over Trailing Stop.
- Select the distance in points for your trailing stop. (50 points = 5 pips)
- You’ll now have a trailing stop loss in place.
How to Set a Trailing Stop Loss on MT4 (Step by Step)
Setting up a trailing stop is relatively simple and straightforward in MT4.
For starters, you need to execute the “Open Position” option menu in the TERMINAL window.
After that, you simply designate the distance you want between the stop loss level itself and the current price in the market when the position is opened.
Just remember that you are only going to be able to lock in a single trailing stop for each trade. You’re not going to be able to have multiple trailing stops on each open position.
Once this has been taken care of, though, you can leave all the rest of the heavy lifting to MetaTrader 4.
Every time new quotes come in the terminal is going to see what the open position looks like, and as soon as the open position begins to climb your trailing stop is going to move up with it.
Each new movement is going to lock the trailing stop into the highest value possible, and the trailing stop will not execute until the price for the asset has tumbled to what the most recent trailing stop was.
Investors are going to be able to cement in profit that would have otherwise been lost with traditional stop loss orders. This can be a game changer, helping to turn what could have been big losses into profits (sometimes small profits, but profits all the same).
Learning how to set a trailing stop loss on MT4 is an essential if you’re going to be using this platform a lot moving forward.
What is a Trailing Stop Loss in Forex?
What is a trailing stop loss in forex, exactly?
This is a very specific type of trade order that you can execute in most top-tier trading platforms – including MetaTrader 4.
The idea here is to execute a trade (automatically) relative to certain price fluctuations that you set up and establish in advance.
If a price goes up, the trailing stop gets “carried” up with it – but as soon as the price stops going up (levels off or even starts to drop) the stop loss gets cemented at the level that it was carried too.
The general idea here is that you aren’t punished for a trade becoming more and more successful with a stop loss that stays static in relation to actual market action.
With a traditional stop loss, the price of the asset you were watching could have climbed higher and higher and then dropped suddenly – all the way back down to your original stop loss. Then (and only then) would your trade have executed and you would have left your position.
Thanks to a trailing stop, though, your stop loss gets moved upwards as the price of the asset you are trading moves – allowing you to lock in those profits with an adjusting stop loss.
The Benefits of Using a Trailing Stop Loss
The reason you need to learn how to set up a trailing stop loss on MT for is simple:
By adjusting your stop loss up (and matching that stop loss to asset prices that rise) you’re guaranteed to lock in profits that you otherwise would have missed out on.
With this kind of trade you get to automatically – and instantly – protect yourself from any potential downside on a trade while locking in all of the upside that you would have missed out on otherwise.
As long as the market continues to climb you are able to get more and more value out of your trade. If things turn around (and drop below a specific distance that you designate from the high) you out the trade instantly and minimize your losses while pocketing a decent amount of profit.
Here’s a quick example:
Let’s say that you have set a 25 PIP trailing stop in MT4 on the EUR/USD pair. Let’s also say that you buy that pair at 1.2550.
This establishes your trailing stop automatically in MT4 at 1.2525.
If the price climbs all the way up to 1.2600 the new trailing stop is going to lock in at 1.2575. If the market continues to climb, the trailing stop continues to lag 25 pips behind.
Let’s say, though, that after reaching 1.2600 the market starts to take a tumble.
As soon as it hits 1.2575 though your trade executes immediately – getting you out of your position – but keeping you above that initial trailing stop at 1.2525.
This can be a game changer and it’s fully automated.
Maximize this feature in MetaTrader 4. You won’t regret it!
In Summary – How To Set A Trailing Stop Loss On MT4
In conclusion, it’s fairly simple to setup a trailing stop loss on MetaTrader 4 – which is why you need to learn how to do it.
You simply need to program Trailing Stops (in the Expert Advisor tab) and make sure that they are set up based on a minimum distance between your entry price and stop loss. You can even vary the distance, depending on market conditions.
If you are about to open a new trade, make sure that the stop loss is far enough away from the entry price. Once you get moving in your chosen direction, it’s time to fine tune your trailing stop loss.
You can also set up how often you want to trail your stop loss by varying its distance relative to market conditions.
Have you ever used a trailing stop loss on MT4? Let me know in the comments down below.